Contractors hit by the collapse of Carillion will be able to apply for Government-backed loans from high street lenders as part of a £100 million support package, it has been announced.

Business Secretary Greg Clark said the British Business Bank will support high street lenders to give loans to small and medium-sized businesses (SMEs) and individuals owed money by the failed outsourcing giant.

The move comes after three high street banks agreed to provide “tailored support” worth almost £250 million to those facing a hit from the company’s collapse.

Carillion owed huge sums when it went into liquidation in January, putting thousands of jobs at risk.

On Friday it was announced that 377 Carillion staff would be made redundant, although 919 had been saved as new employers took on their contracts.

The latest financial support measure will provide support to high street lenders which might not otherwise give loans to Carillion contractors because they may lack the required assets for security.

Carillion crisis

Mr Clark said: “We want to signal very clearly to small and medium-sized businesses who were owed money by Carillion that they will be supported to continue trading.

“The banks have responded to my request by agreeing to support businesses and individuals affected.

“This further guarantee will help those businesses who may not be able to provide the usual security for a loan.”

The previous support package announced by Lloyds Banking Group, HSBC and RBS was dismissed as a “sticking plaster” at the time by industry representatives.

Brexit

Mr Clark’s department said the latest round of support will be of benefit to small businesses including the chain of subcontractors to Carillion.

The guarantees can be used to support overdraft borrowing and refinancing of existing debt, the department said.

The Government has set up a task force involving business and unions to support firms and workers affected by the collapse of Carillion.

Its liquidation left in its wake a £900 million debt pile, a £590 million pension deficit and hundreds of millions of pounds in unfinished public contracts.

The British Business Bank is 100% owned by the Government but managed independently and specialises in providing financing for smaller businesses.